The Supreme Court’s Transgender Bathroom Case Rebuff, What Direction Should School Districts Take?

On June 28, 2021, the Supreme Court denied the Gloucester County School Board’s petition for a writ of certiorari or stated another way denied to hear an appeal from the School Board from a Federal Appellate court.  So at this juncture,  it appears the Justices don’t seem inclined to intervene in disputes over transgender rights and bathrooms.  So what are the implications of the Court’s action or more accurately inaction in Grimm v. Gloucester County School Board?

The Background and Twisting Litigation in Grimm v. Gloucester

Prior to appeal to the Supreme Court, the United States District Court for the Eastern District of Virginia denied a motion by the Gloucester County school board to dismiss the Title IX and Equal protection lawsuit brought by student Gavin Grimm.

In Grimm v. Gloucester County School Board the Plaintiff Gavin Grimm, a transgender student, challenged a school board resolution that required him—and other transgender students—to use the bathroom associated with his “biological gender.” G.G. ex rel. Grimm v. Gloucester Cty. Sch. Bd., 822 F.3d 709, 716 (4th Cir. 2016), cert. granted in part, No. 16-273, 2016 WL 4565643 (U.S. Oct. 28, 2016). Grimm sued the school board, alleging that the policy violated Title IX as well as the equal protection clause of the Constitution.

What does Title IX Protect?

Title IX of the Education Amendments of 1972 (Title IX) is a federal law that states in part:

“No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance.”

What does the Equal Protection Clause of the Constitution Protect?

The Equal Protection Clause is part of the Fourteenth Amendment to the U.S. Constitution and the part most frequently litigated reads:

“No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

Specifically, the phrase “equal protection of the laws” has been used by the Supreme Court to find constitutional protection in a number of gender and public education related situations.

What Does the Due Process Clause of the 14th Amendment Protect?

The Due Process clause of the 14th Amendment which explicitly applies to the states,   essentially mirroring the protections of the 5th Amendment, which only applies to the Federal Government , thereby adding additional protections for individual rights from intrusion by the states.  The Due Process clause guarantees the following rights from interference by the states:

In addition to his Title IX and equal protection clause claims, the plaintiff in Grimm v. Gloucester relied heavily on a Department of Education (DOE) /  Office of Civil Rights Letter (OCR) known as a “Dear Colleague Letter” interpreting Section 106.33 (34 CFR 106.33 Comparable Facilities)  to require schools to “treat transgender students consistent with their gender identity.” G.G., 822 F.3d at 718.

In response to the Fourth Circuit Court of Appeals decision in Grimm v. Gloucester County School Board, 2016 WL 1567467 (4th Cir. April 19, 2016), on May 13, 2016, the Department of Labor (DOL) and the Department of Education under the Trump Administration issued a joint directive to school districts summarizing “a school’s Title IX obligations regarding transgender students and explains how the [DOE] and the [DOL] evaluate a school’s compliance with these obligations” or another a “Dear Colleague Letter.”

The Fourth Circuit’s majority opinion in Grimm (2106) relied heavily, if not exclusively, on the Obama Era’s DOE’s interpretation of Title IX and that requiring transgender students to use the restroom associated with their biological sex equated to discrimination on the basis of sex.

The school district in Grimm, along with several state attorney generals, petitioned the Fourth Circuit for a hearing before the full panel.  The Fourth Circuit denied the and School District appealed to the United States Supreme Court for review and the Supreme Court granted certiorari in 2016, but after the change of administration the Department of Education withdrew the “Dear Colleague Letter”, the Supreme Court opted to not to hear the case and vacated and remanded the case back to the Fourth Circuit.

Grimm then filed an amended complaint, and in 2020, the Fourth Circuit affirmed the district court’s ruling in favor of Grimm.  The Fourth Circuit, in its 2020 ruling relied on 2020 landmark Supreme Court case, Bostock v. Clayton County, which held that Title VII’s prohibition of discrimination on the basis of sex necessarily includes discrimination on the basis of sexual orientation and gender identity. The Fourth Circuit extended the Supreme Court’s reasoning in Bostock  to Title IX’s analogous prohibition of discrimination on the basis of sex.

The School District once again appealed and the Supreme Court refused to grant certiorari on June 28, 2021, so the underlying 2020 Fourth Circuit opinion stays intact.

What Impact will Grimm v. Gloucester Actually Have?

According to Shannon Farmer a Labor & Employment partner in the Philadelphia office of Ballard Spahr, with extensive litigation experience related to civil rights:

“As the Fourth Circuit’s decision and the Supreme Court’s denial of certiorari makes clear, the Court’s landmark ruling in Bostock changed the legal landscape surrounding LGBTQ+ discrimination. When Grimm was before the Court in 2016, the underlying Fourth Circuit decision was based on administrative guidance with limited authority. The Fourth Circuit’s most recent ruling, however, was grounded in the Court’s reading of statutory language. Although the Supreme Court explicitly stated that the Bostock opinion did “not purport to address bathrooms, locker rooms, or anything else of the kind,” its decision not to hear the Grimm case allowed Bostock to be extended to provide exactly those protections. In addition, the Biden Administration’s March 8 Executive Order and a subsequent memorandum from the DOJ have extended Bostock to the educational context.”

Although many institutions have created or are beginning to create policies for transgender students, the long and winding road of the Grimm case shows there are still challenges ahead and changes in direction from the DOL, DOE and OCR  with different administrations, can make keeping up with the rules a moving target. As it stands today, revisions to existing policies will call for more clearly-defined inclusivity provisions for the LGBTQ community.

According to Nikki Hatza, an associate in the Philadelphia office of Ballard Spahr with previous experience with the Employment Litigation Section of the U.S. Department of Justice’s Civil Rights Division:

“Given the Biden Administration’s guidance and the existing appellate court decisions interpreting Title IX and the Equal Protection Clause to prohibit discrimination on the basis of gender identity, schools should review and adjust their policies as needed to comply.”

Per Art Coleman, of EducationCounsel and past Deputy Assistant Secretary for Civil Rights, U.S. Department of Education, who along with his team, last year filed an amicus brief in the U.S. Court of Appeals for the Fourth Circuit on behalf of Gavin Grimm:

“The U.S. Supreme Court’s decision not to consider the appeal in the Grimm case is not surprising in light of the unbroken string of recent federal appellate decisions that affirm that the protections of Title IX extend to transgender students.  Coupled with recent U.S. Departments of Justice and Education actions that align with those rulings, clear consensus has emerged under federal law.”

The federal court rulings that affirm the extension of Title IX protections to transgender students have continued to affirm the reality of consequential harm to transgender students that occurs when they are denied from full participation and opportunities in education.  In the end, the cases really are about the indisputable harm to students that results from lack of equal opportunity—medically, psychologically and educationally.  The federal courts—and the Biden administration—have recognized that reality, and won’t countenance it.  Because the law doesn’t.

Jessica Clarke, a professor of law and co-director of the George Barrett Social Justice Program at Vanderbilt University believes that Grimm v. Gloucester will cause groups with concerns related to LGBTQ rights to shift their attention from the bathroom issue and served as the impetus for school districts to adopt more trans-friendly bathroom policies.

“The decision not to grant certiorari is important because it did not disrupt the emerging consensus among federal courts–not just the Fourth Circuit–that schools may not forbid transgender students from using restrooms consistent with their gender identities. One factor that has been important in this development is that school districts around the country have adopted trans-inclusive restroom policies without experiencing any of the disruption that was feared. As a result, we are likely to see conservative advocacy groups shift the focus of their attacks on the LGBTQ community from restrooms to other issues.”

Copyright ©2021 National Law Forum, LLC

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U.S. Supreme Court Rejects Latest Challenge to ACA in 7-2 Ruling

On June 17, 2021, the U.S. Supreme Court rejected a long-anticipated challenge to the Patient Protection and Affordable Care Act, known as the “Affordable Care Act” (ACA). This was the third case in a trilogy of challenges to the ACA. See California et al. v. Texas et al., No. 19-840.

In a 7-2 decision, the Court held that the state of Texas (along with over a dozen states and two individuals) simply lacked standing to challenge the constitutionality of a statutory mandate with no consequences. Justices Alito and Gorsuch dissented, and Justice Coney Barrett joined the majority.

The Court did not reach the merits of the appeal, which concerned whether the individual mandate provision of the ACA, previously determined to be unconstitutional, may be severed from the rest of the law or whether the entire law must be struck down. Basically, the plaintiffs argued that if the individual mandate provision was unconstitutional, the entire ACA was unconstitutional.

Instead, the Court determined that the plaintiffs lacked standing, explaining that the plaintiffs could not demonstrate any actual injury traceable to the penalty for violating the individual mandate, which was established in 2017 at an amount of $0.

From its inception, the status of this case has been of concern to a wide variety of stakeholders in the health care industry. Beginning with the ruling by a federal district court in Texas that invalidated the ACA in its entirety, to the Fifth Circuit Court of Appeal’s ruling that only the individual mandate was unconstitutional while the rest of the ACA should remain intact, onlookers have eagerly anticipated the Supreme Court’s decision on this matter.

For now, the ACA remains the law of the land.

©2021 Greenberg Traurig, LLP. All rights reserved.
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Supreme Court: Philadelphia Ordinance Unconstitutionally Burdened Religious Exercise

The U.S. Supreme Court has found that Philadelphia’s ordinance requiring a private foster care agency to certify same-sex couples as foster parents burdened the agency’s religious exercise in violation of the Free Exercise Clause of the First Amendment. Fulton et al. v. City of Philadelphia, Pennsylvania et al., No. 19-123 (June 17, 2021).

Justice John Roberts, writing for the Court, found that Philadelphia unconstitutionally burdened the religious exercise of Catholic Social Services (CSS) — a private foster care agency in Philadelphia — by “forcing it to either curtail its mission or to certify same-sex couples as foster parents in violation of its religious beliefs.”

The Court’s decision primarily focused on whether Philadelphia’s Fair Practices Ordinance was both neutral and generally applicable and, therefore, constitutional, even if it incidentally burdened religion. For employers, however, the Court’s decision that CSS’s actions were not subject to the public accommodation provisions of Philadelphia’s Fair Practices Ordinance presents significant implications in cases alleging discrimination in places of public accommodation. The scope of this decision is limited in its application to the private sector.

Supreme Court Decision

The Court ruled that the contractual terms in contracts offered to private foster care agencies by Philadelphia forbidding discrimination on the basis of sexual orientation were not neutral and generally applicable. This ruling was based on a key exception in Philadelphia’s Fair Practices Ordinance granting the Commissioner of the Department of Human Services the authority to make individual exceptions to its general prohibition on discrimination based upon sexual orientation — “in his/her sole discretion.” Justice Roberts reasoned, “No matter the level of deference we extend to the City, the inclusion of a formal system of entirely discretionary exceptions in section 3.21 renders the contractual nondiscrimination requirement not generally applicable.”

The Court also ruled that CSS’s refusal to certify same-sex couples did not constitute an “Unlawful Public Accommodations Practice[]” in violation of Philadelphia’s Fair Practices Ordinance, which prohibits “deny[ing] or interfer[ing] with the public accommodation opportunities of an individual or otherwise discriminat[ing] based on his or her race, ethnicity, color, sex, sexual orientation,” among other protected categories. The Court explained that the decision whether or not to certify foster parents for adoptions was not a service “made available to the public” because it “involves a customized and selective assessment that bears little resemblance to staying in a hotel, eating at a restaurant, or riding a bus.” Justice Roberts noted, “[T]he ‘common theme’ is that a public accommodation must ‘provide a benefit to the general public allowing individual members of the general public to avail themselves of that benefit if they so desire.’” Therefore, because of the personalized nature of evaluating and selecting foster parents for adoption, CSS’s certification process was not the type of public service that Philadelphia’s Fair Practices Ordinance was intended to cover, the Court said.

Finally, the Court rejected Philadelphia’s various justifications for its non-discrimination requirements in its contracts with foster care agencies. This included the City’s stated interest in “the equal treatment of prospective foster parents and foster children.” The Court acknowledged that “this interest is a weighty one,” but could not justify denying CSS an exception for its religious exercise in this case, while making such exceptions available to others in the Commissioner’s “sole discretion” under the Fair Practices Ordinance.

Concurring Opinions

In three separate concurring opinions, the justices questioned the scope and impact of the majority’s decision, though endorsing its holding. Justice Amy Coney Barrett’s concurrence (joined all or in part by Justices Brett Kavanaugh and Stephen Breyer) questioned what standard would apply if the Court were, in a future case, to overrule Employment Div., Dept. of Human Resources of Ore. v. Smith, 494 U.S. 872 (1990), which set the standard that neutral and generally applicable laws do not violate the First Amendment’s Free Exercise Clause. However, Justice Barrett noted the Court need not find a replacement for Smith now, as Smith did not apply in the present dispute, because the contract at issue was neither neutral nor generally applicable. As the CSS contract gave the government the right to make discretionary exemptions from its non-discrimination rule, the law was subject to strict scrutiny, instead of the Smith standard.

In another concurrence, Justice Alito (joined by Justices Clarence Thomas and Neil Gorsuch) reasoned that the majority should have ruled on the constitutionality of Smith, and strongly suggested that Smith should be overruled, because of its perceived failure to sufficiently protect the free exercise of religion, as well as failing to provide a clear-cut standard.

In a separate concurrence, Justice Gorsuch (joined by Justices Samuel Alito and Thomas) agreed that the Court should have ruled on the constitutionality of Smith, and recounted the past cases in which the Court’s decision not to address Smith’s constitutionality led to a perceived lack of predictability and prolonged lower court litigation.

Implications

For organizations with a religious-based mission, the Court’s ruling represents an expansion of their ability to dictate the terms on which they offer their services to the public. State and federal government agencies may want to re-evaluate and re-consider their current contracts with private entities. Employers who contract with state or federal government should examine closely the existing terms and conditions of their arrangements, as well as understand what exceptions, if any, are available under relevant state or federal law.

The implications of the Court’s interpretation of the public accommodation provision under Philadelphia’s ordinance on future public accommodation disputes remains to be seen.

(Summer law clerk Nicholas Bonelli contributed significantly to this article.)

Jackson Lewis P.C. © 2021

 

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Supreme Court Update: Van Buren v. United States (No. 19-783), United States v. Cooley (No. 19-1414), Garland v. Ming Dai (No. 19-1155)

Greetings, Court Fans!

Three more opinions this week, as The Nine continue to chip away at OT20’s remaining backlog. Most notably, in Van Buren v. United States (No. 19-783), an interesting mix (no scare-quotes this time, as it actually is a unique line-up) led by Justice Barrett concluded that the Computer Fraud and Abuse Act (CFAA) does not apply to all individuals who misuse authorized access to a computer, but only to those who exceed their authorized access by obtaining information located in particular files, folders, or databases that are off-limits to him. We’ll have more on yesterday’s decision in Van Buren, the first major case dealing with the CFAA, next time. For now, read on for summaries of United States v. Cooley (No. 19-1414), which held that tribal police officers have authority to detain and search non-Indian persons on public rights-of-way within reservations, and Garland v. Ming Dai (No. 19-1155), which rejected a Ninth Circuit rule that courts reviewing orders denying asylum applications must a treat noncitizen’s testimony as credible in the absence of express adverse credibility findings.

United States v. Cooley (No. 19-1414) addresses the power of tribal police officers to temporarily detain and search non-Indians within reservations. In a unanimous opinion, the Court held that tribal authorities retain fairly broad power to detain and search provided it is necessary to preserve the health and welfare of the tribe.

The case began when Officer James Saylor of the Crow Police Department approached a truck parked on U.S. Highway 212, which runs through the Crow Reservation in Montana. Saylor questioned the driver, Joshua James Cooley, and observed that he appeared to be non-native and had watery, bloodshot eyes. He also happened to notice two semiautomatic rifles on the front seat. Fearing violence, Saylor ordered Cooley out of the car and conducted a pat-down search, during which he found drugs. After Cooley was indicted in federal court on gun and drug charges, the District Court granted Cooley’s motion to suppress the drug evidence on the ground that Saylor lacked authority to detain and search Cooley, a non-Indian. The Ninth Circuit affirmed, concluding that tribal police officers can stop and detain non-Indian suspects but only if they first try to determine whether the suspect is non-Indian and, in the course of doing so, find an apparent violation of state and federal law. Because Saylor didn’t inquire whether Cooley was a non-Indian, the Ninth Circuit found the search invalid.

The Supreme Court unanimously reversed, in a decision by Justice Breyer. Breyer acknowledged that, as a “general proposition,” the inherent sovereign powers of an Indian tribe do not extend to nonmembers of the tribe. But there are two exceptions to that rule, one of which “fits the present case, almost like a glove”: A tribe retains inherent power to exercise civil authority over the conduct of non-Indians on lands within its reservation “when that conduct threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe.” Here, Saylor acted to preserve the health and welfare of the tribe, which he reasonably thought might be imperiled if Cooley—apparently drunk and armed—was let alone. Breyer approvingly cited several state court decisions recognizing that tribal police must have the power to detain drunk drivers, for example, as well as the Court’s own decisions permitting tribal police to detain suspects for the purpose of transporting them to proper authorities. Though the Ninth Circuit gave lip service to this authority (and the need for tribal police to preserve the health and welfare of the tribe), its standard is unworkable. If tribal police could only detain suspects for violations observed in the course of determining whether they’re tribe members, it would give actual tribe members an incentive to lie and claim to be non-Indian. And permitting officers to detain and search only in connection with “apparent” legal violations would introduce a new standard into general search-and-seizure law, and with it new interpretation problems.

Justice Alito penned a brief concurrence explaining that he joined the Court’s opinion “on the understanding that it holds no more than the following: On a public right-of-way that traverses an Indian reservation and is primarily controlled by tribal police, a tribal police offer has the authority to (a) stop a non-Indian motorist if the officer has reasonable suspicion that the motorist may violate or has violated federal or state law, (b) conduct a search to the extent necessary to protect himself or others, and (c) if the tribal officer has probable cause, detain the motorist for the period of time reasonably necessary for a non-tribal officer to arrive on the scene.” Whether lower courts will also share that understanding (considering Alito’s vote was not necessary to the judgment) remains to be seen.

Next up, in Garland v. Ming Dai (No. 19-1155), Justice Gorsuch led a unanimous Court in scrapping a longstanding Ninth Circuit immigration rule that, in the absence of an explicit adverse credibility determination by an immigration judge or the Board of Immigration Appeals, a reviewing court must treat a noncitizen’s testimony as credible and true. Agreeing with numerous Ninth Circuit judges who’ve objected to the rule, Justice Gorsuch concluded that it has no place in a reviewing court’s analysis. While there is a rebuttable presumption of credibility in appeals, judicial proceedings in immigration cases are not “appeals.” Under the INA, the “sole and exclusive means for judicial review of an order of removal” is through a “petition for review,” not an “appeal.” Therefore, while a presumption of credibility might arise in appeals from immigration judges to the BIA, there is no such presumption in the antecedent proceedings before the immigration judge, or in subsequent petitions for review before a federal court. Enough said.

© 1998-2021 Wiggin and Dana LLP


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SCOTUS Slashes Scope of Cybercrime Statute

The Supreme Court handed down a decision significantly narrowing the scope of the Computer Fraud and Abuse Act (“CFAA”), a federal statute that can impose both criminal and civil liability on anyone who “intentionally accesses a computer without authorization or exceeds authorized access”, in its first-ever decision addressing this law.

In a 6-3 opinion in Van Buren v. United States, No. 19-783, authored by Justice Barrett, the Court reversed the Eleventh Circuit’s decision to uphold the conviction of a former police officer who was charged under the CFAA for searching a license plate in a law enforcement database for unofficial purposes.  His conviction concerned a provision of the statute that made it illegal “to access a computer with authorization and to use such access to obtain . . . . information in the computer that the accesser is not entitled so to obtain”.  The officer appealed, claiming that the CFAA did not cover unauthorized use of a database that he was otherwise authorized to access as part of his job.

Recall that the CFAA, which was passed in 1986, is considered to be the primary anti-hacking law and prosecutorial tool against outside actors who are accused of breaking into computer networks (although the statute has also been litigated recently in the commercial context, including in relation to data scraping).  It forbids individuals from intentionally accessing a computer without authorization or “exceed[ing] authorized access.”  The Supreme Court granted certiorari to resolve a split in authority among the Courts of Appeal regarding the scope of liability under the CFAA’s “exceeds authorized access” clause.

The majority opinion closely parsed the language of the CFAA and examined the types of activities that constituted “exceed[ing] authorized access.”  Ultimately, the Court concluded that the provision that Plaintiff had been convicted under “covers those who obtain information from particular areas in the computer—such as files, folders, or databases—to which their computer access does not extend.  It does not cover those who, like [Petitioner], have improper motives for obtaining information that is otherwise available to them.”  Op. at 1 (emphasis supplied).  Justice Barrett’s opinion also focused on the statute’s scope, noting that the government’s broad interpretation would criminalize a “breathtaking amount of commonplace computer activity,” including mundane activities such as using a work computer for personal purposes.

This case is a game changer for pending and future cases brought under the CFAA.  As CPW readers will remember, the hiQ/LinkedIn data-scraping saga ongoing in California federal court had been paused pending a ruling from SCOTUS in Van Buren.  All eyes will be back on that case now, in light of the circumscribed interpretation of the statute adopted by SCOTUS.

© Copyright 2021 Squire Patton Boggs (US) LLP


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SCOTUS: FTC Has No Authority to Obtain Monetary Relief Under Section 13(b) of the FTC Act

The Supreme Court unanimously held that Section 13(b) of the Federal Trade Commission Act does not give the Commission authority to bypass administrative proceedings and seek equitable monetary relief directly from the federal courts.

Section 13(b) of the FTC Act provides that when the Commission “has reason to believe that any person, partnership, or corporation is violating, or is about to violate, any provision of law enforced by the Federal Trade Commission . . . in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction.”  For over four decades the Commission has relied on this Section to bring consumer protection and antitrust actions directly before federal courts seeking injunctions and monetary relief, such as restitution and disgorgement, bringing “far more cases in court than it does through the administrative process.”  And through this path, the Commission has obtained billions of dollars in relief, securing $11.2 billion in consumer refunds during the past five years alone.

In 2012, relying on Section 13(b), the Commission filed a complaint in federal court against Scott Tucker and his companies, claiming that their short-term payday lending practices were deceptive, unfair, and violated Section 5(a) of the FTC Act.  At summary judgment, the district court granted the FTC’s request for an injunction and monetary relief, ordering Tucker to pay $1.27 billion in restitution and disgorgement, which was to be used by the Commission to provide “direct redress to consumers.”  On appeal to the Ninth Circuit, Tucker contended that Section 13(b) does not give the Commission the authority to seek the monetary relief awarded by the district court.  Adhering to its precedent, the Ninth Circuit found that Section 13(b) “empowers district courts to grant any ancillary relief necessary to accomplish complete justice, including restitution.”  The Supreme Court granted Tucker’s petition for certiorari to address the recent Circuit split concerning the “scope of Section 13(b).”

As previously discussed here , during oral arguments Tucker maintained that because Section 5(l) expressly authorizes the Commission to seek “an injunction and other further equitable relief” in district courts against respondents who violate an Administrative Law Judge’s final cease and desist order, and this provision was amended concurrently with the enactment of Section 13(b), Congress intentionally restricted the Commission’s authority under Section 13(b) to “permanent injunctions” only.  On the other side, the Commission argued that the textual variances reflected the functional differences between bringing a claim through the administrative process first versus going directly to the federal courts, and the enactment of Section 13(b) was Congress giving the Commission a choice of enforcement options.

The Supreme Court ultimately reversed the Ninth Circuit’s judgment and concluded that, based on the statutory language, Section 13(b) “does not grant the Commission authority to obtain equitable monetary relief.”

Specifically, the Court found that not only does Section 13(b) solely reference the ability to seek “injunctions,” but when considering the provision as a whole, including the grammatical structure—“is violating” and “is about to violate” —13(b) “focuses upon relief that is prospective, not retrospective.”  Additionally, the Court considered the structure of the Act and the other provisions that explicitly authorize the Commission to seek monetary relief in federal courts only after going through the administrative process and obtaining a cease and desist order.  This includes Section 5(l), which authorizes district courts to award “such other and further equitable relief as they deem appropriate”, and Section 19, which allows for “such relief as the court finds necessary to redress the injury to consumers.”  Based on these provisions, the Court found it “highly unlikely” that 13(b) would allow the Commission “to obtain that same monetary relief and more” without first having to satisfy the conditions and limitations of going through the administrative process as required by Sections 5(l) and 19.

The Court concluded by remarking that the gap in the Commission’s authority made by its decision may be filled by a legislative fix.  Following the decision, the FTC’s acting Chairwoman, Rebecca Kelly Slaughter, issued a statement urging Congress to “act swiftly and restore and strengthen the powers of the agency so we can make wronged consumers whole.”  Until and unless Congress acts, advertisers are likely to see more administrative proceedings with the FTC, as well as the Commission seeking alternative routes for pursuing monetary relief no longer available under Section 13(b).  Chairwoman Slaughter reaffirmed that during her opening statement on April 27, 2021 before the U.S. House Committee on Energy and Commerce Subcommittee on Consumer Protection and Commerce:  “[A] word about the FTC’s other authorities: we will use them all—administrative proceedings, penalty offense authority, more rule-violation cases, more rulemaking, more civil penalty cases where we have specific statutory authority. But, without Congressional action, none of these options will come close to protecting consumers and incentivizing compliance as much as our lost 13(b) authority. I hope you will move swiftly to restore it.”  To be continued, now in the halls of Congress.

The case is AMG Capital Management, LLC v. Federal Trade Commission, Docket No. 19-508, 593 U.S. __ (April 22, 2021).

© 2021 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP


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Supreme Court to Hear Arguments regarding Natural Gas Act and Eminent Domain Power

On April 28, the Supreme Court will hear oral argument in PennEast Pipeline Co., LLC v. New Jersey et al., No. 19-1039, a case with significant implications for pipeline projects.  The main issue is whether the Natural Gas Act (NGA) delegates the federal government’s eminent domain power to Federal Energy Regulatory Commission (FERC) certificate holders and allows them to sue a state to condemn land in which the state claims an interest, or whether the Eleventh Amendment immunizes states from such lawsuits.

Factual and Legal Background

In 2018, following an extensive application and approval process that included public participation and numerous route modifications, FERC granted PennEast a certificate of public convenience and necessity allowing it to construct and operate a nearly 120-mile natural gas pipeline to transport gas in Pennsylvania and New Jersey.

The state of New Jersey has an interest in several properties in the pipeline’s approved route.  Section 717f(h) of the NGA provides that when any holder of a public convenience and necessity certificate cannot obtain by negotiation or contract the necessary rights-of-way to construct, operate, and maintain an interstate pipeline, it “may acquire the same by the exercise of the right of eminent domain” in federal district court.  Under that provision, PennEast brought several in rem actions against New Jersey in district court to establish just compensation and obtain by condemnation the rights-of-way that it had been unable to obtain.

New Jersey moved to dismiss, asserting Eleventh Amendment sovereign immunity from the suit.  The district court rejected New Jersey’s argument and granted the condemnation orders.  However, the Third Circuit disagreed, and vacated the district court’s ruling.  The Third Circuit expressed doubt that the United States can delegate to a private party the federal government’s exemption from Eleventh Amendment immunity that allows it to sue states.  The Third Circuit likened such delegation to an abrogation of sovereign immunity, which Congress can accomplish only through certain federal powers.  Regardless, the court held, the federal government’s eminent domain power and its exemption from state sovereign immunity “are separate and distinct,” and Section 717f(h) delegates only the former, not the latter.

The Third Circuit noted that its “holding may disrupt how the natural gas industry, which has used the NGA to construct interstate pipelines over State-owned land for the past eighty years, operates.” The Third Circuit stated that as “a work-around,” eminent domain actions could be filed by some “accountable federal official.” On January 30, 2020, in response to PennEast’s petition for a declaratory order interpreting the Third Circuit’s decision, FERC issued an order “confirm[ing its] strong belief in” the correctness of PennEast’s position.  FERC also disclaimed the authority to file condemnation actions itself, in place of natural gas companies.

On February 3, 2021, the Supreme Court granted PennEast’s petition for a writ of certiorari.  In addition, the Court instructed the parties to brief and argue a second issue—whether the Third Circuit properly exercised jurisdiction over the case.

Eleventh Amendment Arguments

New Jersey argues that the federal government cannot delegate its exemption from state sovereign immunity to allow private parties to bring condemnation suits against states, but even if it could, Congress did not clearly do so through the text of the NGA.  Thus, New Jersey asserts that the Court “need not conclusively resolve the constitutional question” because the text of the NGA disposes of the issue presented.

By contrast, PennEast asserts that the NGA’s delegation of the federal government’s eminent domain power necessarily includes the ability to sue states.  Concluding otherwise, PennEast argues, would overlook the history of eminent domain proceedings and the fact that Section 717f(h) includes no exception for state-owned properties.  It would also frustrate the NGA’s fundamental purpose of facilitating interstate pipelines.  PennEast also emphasizes that the condemnation actions are in rem proceedings that do not implicate the same state sovereign immunity concerns that in personam suits implicate.  Finally, PennEast argues that the Third Circuit’s decision “not only gives states a veto power over federally approved pipelines but creates gravely misaligned incentives, as a private property owner seeking to preclude construction of a pipeline could do so by granting an easement to a state that shares its opposition.”

A coalition of 19 states—including some facing potential suits regarding pipeline projects—filed an amicus brief in support of New Jersey, primarily based on “the constitutional questions that undergird [New Jersey’s] statutory analysis.”  PennEast’s argument on the merits is supported by numerous industry amici and the federal government.  Those industry amici argue that the Third Circuit’s decision will have significant negative impacts on the industry’s ability to reliably supply the country with affordable natural gas.  Similarly, the federal government has emphasized that an affordable and reliable interstate natural gas supply is a general purpose of the NGA, which the Third Circuit’s decision threatens.

Other Jurisdictional Arguments

In June 2020, the Supreme Court invited the Solicitor General to file a brief expressing the United States’ views on the certiorari petition.  The United States subsequently filed a brief characterizing the case as a “collateral attack on [PennEast’s] authority to execute the terms of the FERC-issued certificate.”  It, therefore, argued that the lower courts lacked jurisdiction to entertain the case because Section 717r(b) of the NGA vests exclusive jurisdiction for direct review of the certificate in the D.C. Circuit or the circuit in which the certificate-holder has its principal place of business.

PennEast and New Jersey both argue that the lower courts properly exercised jurisdiction; neither party understands New Jersey’s Eleventh Amendment challenge as a collateral attack on the FERC certificate.

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The Supreme Court is expected to return a decision before the term ends in late June.

Copyright © 2021, Hunton Andrews Kurth LLP. All Rights Reserved.


For more articles on SCOTUS, visit the NLR Litigation / Trial Practice section.

Supreme Court “Unfriends” Ninth Circuit Decision Applying TCPA to Facebook

In a unanimous decision, the Supreme Court held that Facebook’s “login notification” text messages (sent to users when an attempt is made to access their Facebook account from an unknown device or browser) did not constitute an “automatic telephone dialing system” within the meaning of the federal Telephone Consumer Protection Act (“TCPA”).  In so holding, the Court narrowly construed the statute’s prohibition on automatic telephone dialing systems as applying only to devices that send calls and texts to randomly generated or sequential numbers.  Facebook, Inc. v. Duguid, No. 19-511, slip op. (Apr. 1, 2021).

The TCPA aims to prevent abusive telemarketing practices by restricting communications made through “automatic telephone dialing systems.”  The statute defines autodialers as equipment with the capacity “to store or produce telephone numbers to be called, using a random or sequential number generator,” and to dial those numbers.  Plaintiff alleged Facebook violated the TCPA’s prohibition on autodialers by sending him login notification text messages using equipment that maintained a database of stored phone numbers. Plaintiff alleged Facebook’s system sent automated text messages to the stored numbers each time the associated account was accessed by an unrecognized device or browser.  Facebook moved to dismiss, arguing it did not use an autodialer as defined by the statute because it did not text numbers that were randomly or sequentially generated.  The Ninth Circuit was unpersuaded by Facebook’s reading of the statute, holding that an autodialer need only have the capacity to “store numbers to be called” and “to dial such numbers automatically” to fall within the ambit of the TCPA.

At the heart of the dispute was a question of statutory interpretation: whether the clause “using a random or sequential number generator” (in the phrase “store or produce telephone numbers to be called, using a random or sequential number generator”) modified both “store” and “produce,” or whether it applied only to the closest verb, “produce.”  Applying the series-qualifier canon of interpretation, which instructs that a modifier at the end of a series applies to the entire series, the Court decided the “random or sequential number generator” clause modified both “store” and “produce.”  The Court noted that applying this canon also reflects the most natural reading of the sentence: in a series of nouns or verbs, a modifier at the end of the list normally applies to the entire series.  The Court gave the example of the statement “students must not complete or check any homework to be turned in for a grade, using online homework-help websites.” The Court observed it would be “strange” to read that statement as prohibiting students from completing homework altogether, with or without online support, which would be the outcome if the final modifier did not apply to all the verbs in the series.

Moreover, the Court noted that the statutory context confirmed the autodialer prohibition was intended to apply only to equipment using a random or sequential number generator.  Congress was motivated to enact the TCPA in order to prevent telemarketing robocalls from dialing emergency lines and tying up sequentially numbered lines at a single entity.  Technology like Facebook’s simply did not pose that risk.  The Court noted plaintiff’s interpretation of “autodialer” would, “capture virtually all modern cell phones . . . .  The TCPA’s liability provisions, then, could affect ordinary cell phone owners in the course of commonplace usage, such as speed dialing or sending automated text message responses.”

The Court thus held that a necessary feature of an autodialer under the TCPA is the capacity to use a random or sequential number generator to either store or produce phone numbers to be called.  This decision is expected to considerably decrease the number of class actions that have been brought under the statute.  Watch this space for further developments.

© 2020 Proskauer Rose LLP.


ARTICLE BY Lawrence I Weinstein and
For more articles on the TCPA, visit the NLR Communications, Media & Internet section

Justice Amy Coney Barrett’s Potential Impact on the Supreme Court – President Biden’s Reaction

Justice Amy Coney Barrett was confirmed by the Senate to fill the Supreme Court seat left open by Justice Ruth Bader Ginsburg’s death by a vote of 52 to 48 on October 26, 2020.  Justice Barrett was sworn in on October 27.  Her confirmation was the first in 150 years to not include any votes from the party in the minority, in this case the Democrats, highlighting the polarized response to her candidacy as a Supreme Court Justice.

Justice Barrett served on the U.S. Court of Appeals for the Seventh Circuit after being confirmed in 2017. In addition to her position with the Seventh Circuit, Justice Barrett also served as a professor of law at her alma mater, Notre Dame Law School – a position she held since 2002 and up to her confirmation to the U.S. Court of Appeals for the Seventh Circuit.

The Supreme Court is already hearing oral arguments in key cases concerning healthcare and anti-discrimination laws and religious freedom, Justice Barrett’s background and previous rulings shed some light on how she could eventually rule on the Supreme Court.

How Justice Barrett’s Confirmation Could Impact the Politics of the Court

The confirmation of Justice Barrett to the Supreme Court tipped the political leanings of the Court further to the right, with Republican appointees outnumbering Democratic ones by a 6-to-3-margin.

Justice Barrett clerked for late Supreme Court Justice Antonin Scalia from 1998 to 1999. Like Justice Scalia, she aligns herself with the legal philosophy of originalism – the idea that the Constitution should be given the original meaning it would have had at the time it became law. During her confirmation hearings, she answered a question from Judiciary Committee Chairman Senator Lindsey Graham about her views on originalism, saying:

“I interpret the Constitution as a law, and that I interpret its text as text, and I understand it to have the meaning that it had at the time people ratified it. So that meaning doesn’t change over time and it’s not up to me to update it or infuse my own policy views into it.”

Even though Justice Scalia was a mentor to Justice Barrett, she asserted in her confirmation hearings that with her confirmation Americans “would not be getting Justice Scalia, you would be getting Justice Barrett.” She also stressed that sometimes originalists don’t agree.

During her time as a Judge on the U.S. Circuit Court of Appeals for the Seventh Circuit, Justice Barrett voted conservatively over 80 percent of the time compared to other judges on the Seventh Circuit Court of Appeals, according to a study done by University of Virginia law professors Joshua Fischman and Kevin Cope cited by FiveThirtyEight that analyzed over 1,700 cases that were heard after her confirmation, including 378 that included rulings from Justice Barrett. Specifically, Justice Barrett voted conservatively 83.8 percent of the time in discrimination and labor cases, 87.9 percent conservative in criminal and habeas corpus cases and 83.2 percent conversative in civil rights cases.

However, Fischman told FiveThirtyEight that Justice Barrett is statistically indistinguishable from other conservative judges appointed by President Trump. Additionally, during her time as a judge on the Seventh Circuit, she didn’t always rule in line with other conservative judges, and ruled in a liberal direction 20 percent of the time when a Democratic nominee was on the panel, and 9 percent of the time when a fellow Republican nominee was on the panel,  according to the study.

“This is an attempt to establish a very strong Republican, conservative presence on the federal judiciary,” said Mark Graber, Maryland Carey Law professor and constitutional scholar on Justice Barrett’s confirmation in an interview with the National Law Review.

“That’s the great and terrible truth about this nomination: Judge Barrett holds far-right views well outside the American mainstream,” said Senate Minority Leader Chuck Schumer in response to Justice Barrett’s nomination. Specifically, Schumer highlighted Justice Barrett’s past criticism about previous rulings on the Affordable Care Act (ACA).

“We’re talking about the rights and freedoms of the American people. Their right to affordable health care. To make private medical decisions with their doctors …  Judge Amy Coney Barrett will decide whether all those rights will be sustained or curtailed for generations,” Schumer said.  “And based on her views on the issues—not her qualifications but her views on the issues—Judge Barrett puts every single one of those fundamental American rights at risk.”

While many on the left have expressed fears about a conservative majority on the Supreme Court, O. Carter Snead, a professor of law at the University of Notre Dame and one of Justice Barrett’s former colleagues for over 15 years, wrote that Democrats have “nothing to fear” from her in an op-ed published in the Washington Post.

“There is of course no way to know in advance how a Justice Barrett would rule on hot-button cases. What is clear is that she would carefully analyze each case on its merits, respectful of the stakes for both the rule of law and the stability of our polity, doing her level best to get the question right, regardless of her own personal views,” he said.

What Her Confirmation Could Mean for the ACA

When it comes to healthcare, Justice Barrett has been critical of past Supreme Court decisions on the ACA, writing in a 2017 article published by Notre Dame Law School that Chief Justice John Roberts’ opinions in previous ACA cases NFIB v. Sebelius and King v. Burwell “pushed the Affordable Care Act beyond its plausible meaning to save the statute.”

Additionally, Justice Barrett said in an interview with NPR that the dissent had the better legal argument in King v. Burwell. However, Justice Barrett maintained in her confirmation hearing that she was not determined to overturn the ACA.

“I’m not here on a mission to destroy the Affordable Care Act,” she said.

Specifically, Justice Barrett seemed to suggest in her confirmation hearing that the ACA could survive without the individual mandate because of severability, or that there is a presumption on the Court’s part under judicial tradition to save an underlying law if part of it is struck down.

“The presumption is always in favor of severability,” Justice Barrett said in her hearing.

Supreme Court Oral Arguments in California v. Texas

On November 10, the Supreme Court heard oral arguments in California v. Texas, a case considering if Congress’ 2017 decision to reduce the penalty for the ACA’s individual mandate renders the law unconstitutional. The Court also considered if the challengers to the law have the legal right to sue.

During the arguments, Justice Barrett didn’t indicate whether she thought the ACA should stand, but did express misgivings about whether the penalty could be reduced to zero and still be considered a tax.

“Why can’t we say that when Congress zeroed out the tax, it was no longer a tax because it generated no revenue and, therefore, it could no longer be justified as a taxing power?” she asked.

Justice Brett Kavanaugh and Chief Justice Roberts argued that Congress’ 2017 decision to reduce the penalty for not purchasing health insurance did not indicate the desire to throw out the law in its entirety.

“I think it’s hard for you to argue that Congress intended the entire act to fall. The same Congress that lowered the penalty to zero did not even try to repeal the rest of the act,” Chief Justice Roberts said. “I think, frankly, that they wanted the court to do that. But that’s not our job.”

“It does seem fairly clear that the proper remedy would be to sever the mandate provision and leave the rest of the act in place,” Justice Kavanaugh said.

A decision is expected on California v. Texas in 2021.

What Could Come Next

In the weeks following Justice Barrett’s confirmation to the Supreme Court, much of the political response to the confirmation has revolved around the possibility of adding more justices to the Supreme Court to remedy its shift rightward, and to dampen fears that the Court  could undermine the incoming Biden Administration by legislating from the bench.

“The Court might be a little more conservative or the Court might be a little more liberal, but it turns out, through most of American history, the court is about as close to public opinion to the other branches as anything else,” Professor Graber said. “What I think people are worried about is [that] it shouldn’t be the mission of the Roberts Court to, in some sense, undermine the fundamental initiatives of a Biden administration.”

While the Constitution allows Congress to add and take away judges from the Supreme Court, it has not done so since 1869. In 1937, President Franklin D. Roosevelt supported adding more justices to the Supreme Court, but that proved to be unsuccessful.

President Joe Biden responded to Justice Barrett’s confirmation by stating he would assemble a commission of bipartisan constitutional scholars to determine what the next steps would be moving forward.

In an interview with 60 Minutes, President Biden said that “there’s a number of other things that our constitutional scholars have debated and I’ve looked to see what recommendations that commission might make.”

President Biden said that after 180 days of the commission’s creation, he would expect recommendations from them on how to reform the court system.

When it comes to how Justice Barrett’s confirmation will affect the Supreme Court and the U.S. judicial system in the long term, only time will tell.

“Which type of judge is Barrett going to be? Is she going to be with Roberts? Or, is going to be with Thomas and Alito and say, ‘We control the court and we’re going to fight the Democrats tooth and nail?’ … We don’t really know yet,” Professor Graber said.


For more, visit the National Law Review Election Law / Legislative News section.

What’s “So” Important: Computer Fraud and Abuse Act Gets a Close Look from SCOTUS

In a case with significant ramifications for employers concerned with protecting sensitive information, and for employees accused of abusing access to computer networks, the United States Supreme Court (“SCOTUS”) heard oral argument this week in Van Buren v. United States, No. 19-783, a case from the Court of Appeals for the Eleventh Circuit that will require interpretation of the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030.  The argument was lively.  All of the Justices asked questions, and several expressed concern about vagueness in the CFAA’s definition of covered activity.  Much of the discussion centered on an alleged “parade of horribles,” and on the meaning of the word “so.”  We expect a relatively prompt decision.  Time will tell what SCOTUS will decide, but we would not be surprised to see a reversal and remand.

The CFAA has been a useful litigation tool for employers when confidential or other sensitive information accessed via computer is misappropriated, misused, or otherwise compromised. The CFAA generally prohibits obtaining sensitive information from a computer without authorization, or by exceeding authorized access, and, importantly, confers federal jurisdiction.  While it is a criminal statute, it also provides for a private right of action for those damaged by certain violations.  The issue now before SCOTUS in Van Buren is whether the CFAA is violated when someone with authorized access obtains information for an unauthorized purpose.  For example, when an employee who is authorized to access and use the employer’s computer-stored customer information for business purposes downloads the information to a thumb drive and shares it with a potential new employer, s/he plainly violates company policy.  But does s/he run afoul of the CFAA? Over time, a Circuit split has developed regarding this issue.

Van Buren is a criminal case in which Petitioner Nathan Van Buren, a police sergeant in Cumming, Georgia, was convicted of violating the CFAA.  The Eleventh Circuit affirmed his conviction and SCOTUS granted certiorari.  Briefly stated, as part of his duties Van Buren was granted authorized access to a database containing license plate and vehicle registration information maintained by the Georgia Crime Information Center (“GCIC”).  Training materials supplied to those with access to the GCIC database quite reasonably prohibit use of the database for personal purposes.  However, in return for cash payments, Van Buren agreed to, and did, use his authorized GCIC username and password to access a woman’s license and registration information in order to learn personal information about her on behalf of another individual.  There is no dispute that such use was not within the GCIC guidelines for authorized use. Accordingly, Van Buren used his authorized access to the GCIC database for an unauthorized purpose.  He was charged with, among other things, violating the CFAA.  He was convicted of the CFAA violation, sentenced to 18 months in prison, and he appealed.  The Eleventh Circuit court upheld the conviction, holding, based on precedent within the Circuit, that the unauthorized use of authorized access does constitute a violation of the CFAA.

Because Van Buren was not an outsider or other unauthorized user hacking into the GCIC database, his conviction under the CFAA turns on application of the facts to the CFAA’s prohibition on “exceeding authorized access.” The CFAA defines “exceeds authorized access” to mean “to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.”  18 U.S.C. 1030(e)(6) (emphasis added).  Generally, the First, Fifth, Seventh and Eleventh Circuits construe the definition broadly, finding CFAA violations against employees, for example, who access information they are entitled to obtain for certain purposes, but do so for unauthorized uses.  In other words, courts in those Circuits tend to focus on the purposes of authorized access and require computer users to stay within those purposes in order to avoid violations of the CFAA.  This interpretation would allow an employer to bring an action under the CFAA against an employee who, for example, misappropriates sensitive business information s/he was entitled to access as part of his or her job for use with a subsequent employer.  The Second, Fourth and Ninth Circuits, on the other hand, favor a narrower interpretation, in which there is no violation unless the accessed information at issue is, itself, not information the user is entitled to obtain or access at all.  Under that construction, an employee who obtains information from a database s/he is not otherwise permitted to use (e.g. restricted Human Resources information by someone not within the permitted sphere) would violate the CFAA while someone who misuses information s/he is otherwise entitled to access would not.

Van Buren is the first case to present the issue to SCOTUS.  Petitioner, with robust amici support from organizations like Reporters Committee for Freedom of the Press, National Whistleblower Center and technology companies, largely focused his arguments on the dangers of a “parade of horribles” that could arise from the broader interpretation. (See, e.g., Oral Argument at 8).  Petitioner posited that, for example, computer users who check Instagram on their work computers in violation of their employer’s computer use policies, or those who inflate their characteristics on a dating site, in violation of the stated terms of use of such sites, could be guilty of a federal crime should the Government choose to prosecute.  (Oral Argument 4, 22).  He argued that the CFAA is impermissibly vague and that any changes should be left to Congress.

The Government’s position that the CFAA should be broadly read was also supported by several amici, including the Electronic Privacy Information Center and the Digital Justice Foundation.  The Government contended that, pursuant to the definition, a user “exceeds authorized access” by accessing information that s/he did not have a right to access in the particular manner or circumstances used.  Thus, Van Buren violated the CFAA, according to the Government’s position, because he accessed the GCIC under circumstances other than for law enforcement purposes.  As part of its argument, the Government closely examined the meaning of the word “so” in the definition of “exceeds authorized access,” and contended that a person is “entitled so” to do something only when s/he has a right to do it in the particular manner or circumstance authorized.  Brief for the United States at 13.  Van Buren, on the other hand, contended that “so” refers only to “access[ing] a computer with authorization” such that an individual does not “exceed authorized access” if entitled to access the database in question at all. (Oral Argument at 21).

The questions from the Justices during oral argument closely followed those competing themes, further discussing the proper construction of the word “so,” and examining whether some of the more innocuous-sounding activities would actually constitute violations of the CFAA under the broader construction.  Some expressed concern about the privacy of the public if the CFAA is not construed to encompass, for example, government employees reviewing private information for purposes other than those called for in their jobs.  Oral Argument at 14.  Based on the overall tenor of the argument, SCOTUS may be prepared to agree with the more narrow interpretation currently favored by the Second, Fourth and Ninth Circuits, and to overturn Van Buren’s criminal conviction that turned on the broader interpretation. In any case, we will watch for a decision.

We observe use of the CFAA in civil cases to already be diminished in the last four years.  Passage of the Defense of Trade Secrets provides access to federal courts in circumstances where the CFAA was used to create federal jurisdiction.  And as explained above, use of the CFAA in such cases has been curtailed in several Circuits. It will be interesting to see whether the SCOTUS decision in Van Buren further restricts its utility.


©2020 Epstein Becker & Green, P.C. All rights reserved.
For more articles on computer fraud, visit the National Law Review Litigation / Trial Practice section.